Is your buyer abroad asking for bank guarantees in connection with the capital goods you are to deliver to him?
If you want a prepayment, your customer often requires your bank to provide a prepayment guarantee in return. Or a potential customer asks for a bid guarantee (tender bond) in a tender. Sometimes your bank also provides other guarantees on your behalf. These burden your bank facility. With our guarantee covers Fair Calling Facility and Counter Guarantee, you can free up credit with your bank. Read how this works here.
Atradius Dutch State Business' bond cover protects you and your bank against the risk of your buyer calling in the guarantee. We offer various products, depending on your needs and those of your bank. We cover you against the risk that your buyer calls in the guarantee in error. We cover your bank against the risk of each call, whether justified or unjustified.
- additional cover, if you also insure the non-payment risk on your buyer with us;
- stand-alone bond cover, if you have no need for other risk cover on your buyer;
- bond cover as part of the Fair Calling Facility. You receive this cover if you do not need other risk covered on your buyer, but your bank requires a counter guarantee from us. See further below.
- Counter Guarantee. The bank receives this guarantee if you have additional cover with us;
- stand-alone Counter Guarantee. This guarantee the bank receives if you have no further need for cover;
- Counter Guarantee as part of the Fair Calling Facility. The bank receives this guarantee if you have cover under the Fair Calling Facility.
This frees up liquidity space that you can use for your business operations.
What is the covered percentage?
- if your export transaction is insured for the manufacturing and credit risk on your buyer (with or without counter-guarantee): maximum 95 to 98%;
- if you do not insure the export transaction for the manufacturing and credit risk and you do not need a counter-guarantee: maximum 95 to 98%;
- If you do not insure the export transaction for manufacturing and credit risk and you do need counter-guarantee: maximum 80%.
Assessment
If we indemnify your bank under a counter guarantee, and your buyer’s calling of the guarantee was justified, we will recover from you the amount we paid to your bank. This is called our right of recourse. We will assess your company to estimate the chances of having to exercise our right of recourse. Your total liability for recourse for the counter guarantees which we have issued to your bank or banks may not exceed thrice your equity or that of your recourse guarantor (for example, a parent company). The total value of counter guarantees issued for a single export transaction may not exceed your equity or that of your recourse guarantor.
We will furthermore assess your and your recourse guarantor’s solvency, liquidity and profitability as well as your ability to successfully complete the export transaction as per the terms of your contract.
What guarantees can you insure with us?
- Advance payment bonds;
- performance bonds;
- maintenance bonds;
- retention bonds;
- bid or tender bonds.
How to you apply for cover?
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You may use our application form to apply for cover for each contract. Your bank may need to issue several guarantees on your behalf for a single contract.
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You may apply for insurance with us prior to the date of issue of the guarantee(s). If we are prepared to underwrite the risks, we will issue you a promise of cover. You are to inform us when the guarantee is to be issued, at which time we will convert the promise of cover into an insurance policy covering the relevant guarantee(s). The promise of cover will remain valid for any insured guarantees which are still to be issued.
- On the application form you may request us to issue a counter guarantee to your bank.
- If you do not wish to take out insurance for your transaction but your bank wishes to receive a counter guarantee from us, your bank must apply for this directly with us.
The amount of the premium is fixed at the beginning of the transaction. It depends, among other things, on the amount of the contract, the country of export and your customer's rating. But the payment term also plays a role.
